Cigarette Tax Increase to Finance SCHIP (State Children's Health Insurance Program), June 19, 2007

摘要

The Senate Budget Resolution, S.Con.Res. 21, 110th Congress, permits an increase in the cigarette tax to pay for the State Childrens Health Insurance Program (SCHIP). Current federal taxes are 39 cents per pack, and taxes imposed at all levels of government account for about a third of the price of cigarettes. A 50 cent increase, for example, would raise nearly $7 billion a year, but would cost state and local governments about $1 billion. (An original proposal to raise the tax by 61 cents was not adopted, so the likelihood of a tax increase and its potential size is uncertain.) A justification for the tax is to discourage smoking, particularly by teenagers. Most evidence suggests there is likely to be a reduction, but that the response may be small. One reservation about the tax is that the burden falls heavily on low-income individuals.